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Subprime 2.0 - Auto Loan Deliquency Balances Rise 24% YoY
As we warned six weeks ago, the Fed's ZIRP side-effects have driven auto-lenders to scrape the bottom of the subprime-lending barrel once again (loans to subprime borrowers +18% YoY). It seems, based on the Fed's latest data, that this over-exuberant lending is coming back to bite once again as delinquent balances surge 23.9% year-over-year (though optimistically Experian reflects "obviously, we never want to see a rise in delinquencies or repossessions, but... they are still lower than the recession-level rates,"). As Experian also notes today, repossessions rose 16.9% year-over-year. All this as lending volumes overall rose 9.6% to $726 billion in Q1 2013 but average charge-off amounts rose by 9.8% to $7,401 on each defaulted loan - and the worse is yet to come, as "we continue to move forward, we should start to see more increases as some of the subprime loans coming onto the books begin to deteriorate." This will end well.
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Were these auto loans securitized and if so, how do I short them?
Very bullish for stocks, because when these deadbeats finally default, SCUMBAG Bernanke will have to print another boatload of monopoly money.
Better than McD's
Fed's motto:
"Trillions and trillons printed"
BULLISH
I don't know why they even bother to have the "market" open for 6 hours. The bernank should just dump his $3 Billion in at 9:30 a.m., adjust the price of everything to be 1.2% higher than yesterday, and then we can all go to the beach or the golf course, or ...
Of
bought a new car in 2010. had only been in business for myself for 2 months. was offered 0% apr with no money down. paid over 50% down, but was amazed about the easy access to credit.
My car is 14 years old, and I plan to drive it into the ground. If it lasts a few more years, I'll likely be able to boost a black-and-white after society collapses and the cops go to war with the city folk.
I am not sure if you thought that one through yet. I think your new wheels would be a target rich environment.
Nothing a new paint job couldn't fix. I could even write "Volt" on the side and get millions of dollars from the government.
+1
LOL! Fisker.
http://www.youtube.com/watch?v=QTOg4aYGtdY
It's comments like this that keep me coming back to this depressing news site.
Let's see, GMAC was spun off of GM to offload the loser loans and save the company. Respun as Ally and then repurchased by GMAC, last year I think...yup...GM is a short again...
The Fed/taxpayers will bail them out again by buying up all those bad loans at par.
Get long gasoline, cars sitting in parking lots do not use fuel.
I just took out a 132 month Ally Bank loan on a BMW 750. According to the Argentinians luxury cars are a good way to preserve wealth.
Sure, when inflation picks up speed then anything you can buy now and then sell again later is better than holding cash.
Bully for you! You might be able to sell it used for twice the price new after the Weimar Tar Ducktm descends!
Daffy Duck says, your a racist.
Sylvester sez, (channel) "Stufferin' SuckerCash!"
in any enviroment a new car is the worst investment you can make-but thanks to americans and their love of being brainwashed by advertising they keep ponying up $ they don't have (therefore they get a loan) for something that will be melted down for scrap in 10 years. the neighbor down the street bought 2 new cars last year and now his wife is bitching about the $800 a month in car payments they have- and she's an accountant-supposedly good w/$.
I'm talking about preserving your money in an inflationary environment. They don't give out loans in pesos in Argentina. The inflation doesn't allow for long term lending. So if they'll give you money for nothing in the US and you believe that we will have inflation soon then it makes sense to buy assets with it. One of the things that struck me on my trip was that people there didn't have credit cards.
Why do you hate America?
+1 Believing cars are investments is one of the bigger lies car salesmen are tawt to push. And durable goods are not going to do well in an inflationary environment - all the clownbux will be chasing staples, leaving leveraged "assets" like homes and cars to plummet back down to where they ought to be.
I agree because as soon as you drive a car off the lot the value just went down but buying Vintage/Classic automobiles is a safer bet to store some wealth if one were going the car buying route.
Vintage Harley Davidsons...
Some of those guys are friggin nuts with money. I get ridiculous offers on mine.
Mines for riding. No Sale.
Buying vintage/classic cars is a sucker bet. Did you not see the decline of vehicle's from the 20's and 30's? Muscle was saved for ther time being, but it's day will come.
The actual value of the car doesn't change the second you drive off the lot, but the re-sale value does. Don't get me wrong, best way to buy is a late model used car, but used car prices are historically high, so the new car premium is a lot less than it used to be. If you buy and hold a car for 10-15 years, who cares what the resale value was when we drove it off the lot?
Only reason to buy a new car is to get exactly what you want. If you're not picky, buy used.
I bought new in 2004, and plan to get 200K+ miles out of it. I'm about halfway there. All those car payments I don't make in the meantime are going towards the silver/gold/lead fund.
Otto's goin HOLLYWOOD!!!!
Bought a couple Jeep Cherokee's for the kids. Straight 6, runs forever with proper maintenance. The Grand Cherokee's around here are being flipped left and right.
So true. Those inline sixes will never stop. My grandmother has one that during my younger years I put several thousands of miles on. Thing has to be pushing 400000 and still going
Everyone is slowly going broke under fiat currency. Not a surprise.
Who is backing these loans? Can Ben make 'em good if neccessary?
OT but what up with AAPL today?
But the economy is booming an auto makers are making hand over fist!!!!!!
Don't they just repo cars when the payment is past a month or 2 late?
Exactly. Why does this number ever matter?
The big key for car dealers is to get the units off the floor and out of the sales channel any way any how. If they later end up in repo it's fine, the sales dudes still got their commission.
It works ... until it doesn't.
They are doomed any way you slice it. Give it a year or two and the "new car flagship dealership" era will be toast.
Depends on how far into the woods you live, and how often you use the car in public.
That's if they can find the car. I'm sure a newly unemployed person could get a loan for a $60K car, sell it on the black market for $30K cash. The car is shipped to South America or the Middle East. What is the lender going to repo?
It's funny when I drive around town and I see a $30,000 house with a $50,000 car parked out in front of it. We have a nation full of idiots.
there's a term for- that its's called "negro rich". the mexicans around here buy(I mean take out big loans) $50000 SUVs and park them in front of their $100k shitbox houses-they're livin' the dream
Sometimes I will see a car like a BMW sitting in front of a crappy mobile home. I can only shake my head in amazement.
how can you be amazed any more by money choices in the US? my new favorite is $60k for in-ground pools-everybody in my hood is getting them (alot of my neighbors are cops and FF-surprise,suprise-fuckers)
To be fair, BMW is not seen as a luxury brand outside of North America. They use them as police vehicles, in Germany.
I was in Barbados a few years ago, and saw shacks with BMWs parked in front of them. Was amusing.
Still, you're starting around $40,000 to get into your basic model 3 series
I got a 325i premium package for $36,000 including TTL a few years back. It's the worst POS I ever bought. The car fell apart right after the warranty expired. Never again.
The turn over rate and maintenance costs are not so funny.
So I've heard. I have 2 friends that drive BMWs and claim they are moneypits.
I wouldn't know, I drive a 10-year-old Honda Civic. 250k miles and still runs like a champ.
Sweet, yea I hate car bills.
I will attest to that. The warranty was up to 50k miles. At 60k, mine fell apart and I dumped $3K into fixing it up and selling it. POS
Did you check prices on the 5 and 7 series?
it depends on what series of BMW you are talking about.
Oh no. Alarms just went off in Zurich because you said ne*ro. The Tylers will be get more legal letters faxed from Gnome capital. Are we still allowed to say muslim on ZH? In a pejorative way?
Ever notice who drives those new shitbox Chrylsers that no one wants?
No alarm, you are allowed to say so.....
"Negro rich", that's saying it in a PC kind of way.
First time I ever heard that term used was when Nicky Katts said it in the movie "Boiler Room", which by the way, was a movie made waaaaaaaaaaaaaaay before it's time. Who'd of thunk that such corruption and ponzi schemes could actually happen. Coulda been the true story of Bernie Madoff for all we know.
In Toronto Dr. E., they have $500,000 semi-detached homes sitting on a 20' * 40' lot AND a $50,000 car parked out front.
.
The reason the car is parked out front is because the semi does not come with a driveway...great in the winter time.
The funniest part of sub prime loans is that the IQ of the borrowers is equally sub prime.
But when you've be programmed to think that you are "entitled" and deserve a gold star without any meaningful effort, it makes sense.
CNBC gold update.
http://www.cnbc.com/id/100739703
$500 an ounce?! fucking awesome!!!!
LOL
I could actually start buying again. I miss the 90's. I am more than convinced that anyone (even the trolls) on ZH could prognosticate as well as the idiots on CNBC.
Wow look at this market melt up again right now. It's beautiful.
And people believe they will "let" it fall?
you cant eat Gold...
Silver only cost $5 dollars to dig out the ground...
buy more stocks.....
Dow 16,000....
disclaimer: sorry, im a getting ready to go get drunk at the pub and felt like being an ass....
From the comments section: (paraphrasing)".....gold prices are going to go through the floor when interest rates rise."
Interest rates rise....bwahahahahhaah!! That's hilarious!
Do these stupid fucks even know what a bubble is? I would love to see their faces if the Bernank Wasn't printing $85 billion a month. A monkey could make money in this market. If it wasn't for the Bernank their no skill asses would be in the welfare line and begging for their Obamaphone.
It's called Traders Buzz because they're high
Recently sold a 1995 truck, purchased a 2005 of the same model truck used with less mileage and had $100 to spare. I am indeed an idiot.
I'll keep my 68 Dodge 1-ton, thanks. That thing is a working animal, and no computer, no nanny warnings, no shoulder strap, no airbags, and no smog checks required.
Food Stamp/Gov Dole Attitude
They should just ship the cars overseas and the borrowers claim their stolen.
Loads of scams to play on the banksters.
I count this as sub-prime 3.0, student loans being 2.0.
Only, I wish it would be 40%, so at leat stock would be sold. Don't worry whether consumers can come up for it, no one cares, as said before by collegue vmromk, we have the lender of last financing in place.
The term of the 96 month auto loan is just too short! 192 months should do the trick. 16 year auto loans, yeah that's the ticket!
Only if it's a 1992-1994 Honda Accord.
I'm having deja vu
Take my car, Bitchez!
http://www.takemycar.net/how-it-works
hahahaha! ... we're going to get what we all deserve ... fully-informed, but fully-retarded, regardless ... banksters and humans ... they totally deserve each other ... and both will share the same fetes
Stop the whirld ... I wanna get the fuck off ...
I know how to solve this! How about a new 3600 month car loan?
that's the spirit.
Rich guy told me his theory of new cars.
"The only people who buy new cars are dumb rich guys and dumb poor people. The rich guy thinks he can afford to waste money and the poor guy has no choice to buy anything else."
"I'll buy a 2 y.o. Mercedes @50% book from a guy who thought he was rich."
He'd comb the court records for divorce filings and send them a letter offering cash for property.
Got an almost new 40' diesel pusher luxury motorhome worth 750k for taking over 100k in payments that the guy was thrilled to get out from paying right away.
I'm laughing because you thought you got a deal.
I agree with you on some points of buying a new car. I'd never buy a Toyota or Honda anything new. Just too many good ones laying around unmolested.
I would never buy a used sportscar though. Most people shred through their's and when they know they are gonna have to sell it because they can't afford it, they go to the track with it and hammer it.
I purchased my Challenger RT brand new. I'd never buy it used. Too many of them out there that were abused.
Auto loans would be a lot more attractive if they were packaged together with education loans.
All jokes aside, the joke is on Washington as it watches the Dow rise in the face of statistics that are terrible even in view of the fact that they are already manipulated.
they'll catch up on their payments as soon as oil prices drop enough to cut gas prices.
uh, wait.
cheap interest, unqualified buyers. securitization....
ok, houses, then cars, then student loans, then....dental work?
man i hope they don't run outta ideas. that'sa gonna hurta whenna they do!